FEATURED ARTICLES ABOUT GERARD ARPEY - PAGE 2

* AMR showdown with labor unions heats up this month * April 23 hearing on AMR request to void labor contracts * AMR CEO Horton prepared to be tough * Supporters call Horton smart and analytical * Critics say AMR's demands are ruthless By Kyle Peterson April 16 (Reuters) - AMR Corp Chief Executive Tom Horton may have a soft-spoken demeanor, but people who know him say he has a backbone of steel and will not flinch if he has to cut thousands of jobs to save the bankrupt American Airlines.

The Chapter 11 bankruptcy filing by American Airlines never seemed to be a question of if, but when. Loaded down with costs that other airlines cast off in their own bankruptcies after 9/11, American simply couldn't compete. The move Tuesday by Texas-based AMR Corp., the parent company of American Airlines and American Eagle, will give the company a window of opportunity in which to cut employee pay and benefits and retiree pensions and ditch other costs, such as plane leases it doesn't want.

American Airlines said Thursday that suppliers and aircraft lessors agreed to cost reductions that would complete its plan to trim $4 billion in annual expenses, but left open the possibility of still filing for Chapter 11 protection. American disclosed the latest deals and the possibility of bankruptcy in a filing with the Securities and Exchange Commission. It didn't identify the suppliers or the type of reductions. New Chief Executive Gerard Arpey called the deals a significant step forward.

AMR Corp.'s American Airlines, after three years of luring passengers with extra legroom, will squeeze more seats back on some planes to help stem losses that drove the carrier close to bankruptcy. Increasing the seats on 174 planes, or 23 percent of American's fleet, will boost revenue while holding down prices to compete against low-cost carriers, Chief Executive Gerard Arpey said Wednesday at AMR's annual meeting. American, the world's largest airline, took out about 9,700 seats from 875 planes starting in early 2000 and ran advertisements touting the effort.

Starting April 29, airlines that leave passengers stranded on a tarmac in a delayed plane for three hours or more can face a hefty fine under rules adopted by the U.S. Department of Transportation. If carriers don't let passengers out of the plane before the three-hour mark, the agency can fine them up to $27,500 per customer. At least three domestic airlines have announced plans to avoid the penalties. But that won't necessarily cut down on delays. US Airways and Continental Airlines have unveiled procedures to return the plane to the gate if it can't take off before the three-hour limit.

The airlines have closed the book on 2009, and it wasn't pretty. In January, several domestic carriers reported red ink for last year, though a handful managed to keep their bottom lines in the black. And with fuel prices expected by some to rise this year, and travel demand still weak, airlines are facing another difficult year. "The industry starts 2010 with some enormous challenges," said Giovanni Bisignani, CEO of the International Air Transport Association. "The worst is behind us, but it is not time to celebrate."

Although McDonald's Corp. separated its chairman and chief executive positions in announcing its new leadership after the death of James Cantalupo, corporate board experts say it's likely to be temporary. The company said presiding director Andrew McKenna, 74, would serve as non-executive chairman, with chief operating officer Charlie Bell, 43, moving into the CEO's role. Experts say firms that separate the jobs usually do it during a transition, but often just until the new CEO settles in. "Most of the time, it is an interim measure," said Ralph Ward, publisher of the Boardroom Insider newsletter.

Qatar Airways, which had committed to buy 60 A350s from Airbus, could choose Boeing Co.'s planes instead for long-haul routes because the European planemaker hasn't spelled out what kind of plane it will bring to market. Also Monday, American Airlines said it might buy new planes for the first time since 2001 and is in talks with Airbus and Boeing about single-aisle aircraft to replace an aging fleet of 310 MD-80s. "If things don't happen in the time frame we want to happen, then of course we'll look somewhere else," Qatar Chief Executive Akbar al Baker said at the International Air Transport Association meeting in France.

Mayor Richard Daley is set to finally meet Wednesday with the top executives at United and American airlines to try to resolve their differences regarding how quickly to complete the multibillion-dollar expansion of O'Hare International Airport, officials said. The mayor was supposed to meet with the CEOs — Jeffery Smisek at United and Gerard Arpey at American — last week at City Hall. But the airline bosses canceled, citing the blizzard that grounded planes in Chicago and dozens of other cities.

American Airlines, the world's largest carrier, said Wednesday that it will buy 47 Boeing 737 jets four years earlier than planned to begin replacing some of its oldest planes. The aircraft are valued at as much as $3.5 billion at list prices. American said it will get the 737-800 jets starting in 2009. The decision follows the carrier's return to profit in 2006 after five years of losses. "It's time for them to do it," said George Hamlin, president of Hamlin Transportation Consulting in Fairfax, Va. "It's not only a question of high fuel costs with the MD-80s, but also a question of reliability."